Jan. 10 (Bloomberg) -- China’s vehicle sales jumped 32
percent in 2010 as government stimulus measures and economic
growth helped the nation stay the world’s largest auto market
for a second year.

Total auto sales, which include cars, trucks and buses,
rose to 18.06 million, while passenger-car deliveries gained 33
percent to 13.8 million, the China Association of Automobile
Manufacturers said today. Sales of cars and light trucks in the
U.S. gained 11 percent to 11.6 million in 2010, according to
researcher Autodata Corp.

China’s annual vehicle sales jumped about 10-fold in the
past decade as rising affluence and government stimulus policies
boosted demand. The pace of growth may slow in 2011 after the
nation withdrew tax breaks and rural subsidies that helped it
overtake the U.S. auto market, said Jenny Gu, an analyst at J.D.
Power & Associates.

“The pace of sales growth in the past two years was
abnormal and driven by government policies,” said Shanghai-based Gu. “With the removal of those incentives, passenger-car
growth may fall to about 10 percent a year during the next four
years.”

20 Million

In December, total vehicle sales gained 17.9 percent to
1.67 million units, the association said. Passenger-car sales
rose 18.6 percent, to 1.3 million units, it said.

Growth will be around 10 to 15 percent this year, the
association said today. China’s total auto sales may reach 20
million in 2011, Booz & Co. and Nomura Holdings Inc. forecast.

In contrast, light-vehicle sales in the U.S. may be as much
as 12.8 million units, according to Ashvin Chotai, the London-based managing director of Intelligence Asia Automotive.

U.S. light vehicle sales peaked in 2000 with annual
deliveries of 17.4 million vehicles.

The pace of growth in China may fluctuate in the first
quarter, Gu Xianghua, the auto association’s deputy secretary
general, told reporters in Beijing today. More cities may follow
Beijing’s example and impose restrictions on car ownership to
curb traffic congestion, he said.

China this month raised sales tax on vehicles with engines
of 1.6 liters or smaller to 10 percent from 7.5 percent this
year. Subsidies given for trade-in vehicles and to rural
residents to buy vehicles were also phased out.

‘Pretty Big Difficulties’

Chinese carmakers will face “pretty big difficulties”
this year after the government scrapped stimulus measures, Dong
Yang, vice chairman of the association, said at the press
conference in Beijing.

While Chinese automakers who gained the most from state
subsidies may experience slower growth this year, General Motors
Co. and Volkswagen AG, the two largest foreign automakers in the
country, may benefit because they sell a wider range of vehicles,
said Klaus Paur, China managing director of automotive at
consultant Synovate Motoresearch in Shanghai.

More expensive models from overseas carmakers will also
experience growing demand, he said.

China may have overtaken Japan to become the world’s
second-largest economy last year with GDP estimated to have
grown about 10 percent, according to a Bloomberg survey of 18
economists. The country has grown at an average 11.4 percent
pace over the past five years.

GM boosted sales in the country 29 percent to 2.35 million
units last year, the company said last week. GM expects sales
this year to grow as much as 15 percent, according to Kevin Wale,
president of its local operations.

SAIC Motor Corp., a partner of GM and the largest Chinese
carmaker, said last week that it sold 3.58 million vehicles
including those made with partners in 2010, an increase of 31
percent from 2009.